Deterioration of cartilage in adults due to trauma or disease is a major health issue in industrialized nations. Because cartilage lacks a regenerative ability, the therapeutic approach of creating cartilage implants in vitro has recently been put forward. Mesenchymal stem cells (MSCs) are promising candidate cells for cartilage tissue engineering. However, using MSCs for the articular cartilage repair faces a challenge of generating cells with features of stable chondrocytes which are resistant to hypertrophy and terminal differentiation. Prevention of chondrocyte hypertrophy is necessary to avoid vascularization and ossification of the cartilage implants. Chondrocyte differentiation to hypertrophy is regulated by multiple factors, including tissue transglutaminase (TG2). Up-regulation of TG2 in inflamed joints suggests that it may affect the stability of the cartilage implant engineered from mesenchymal cells. We have observed that TG2 is up-regulated during chondrogenic differentiation of the chicken limb bud mesenchymal cells. Moreover, excess TG2 reduces deposition on cartilaginous matrix in differentiating mesenchymal micromass cultures and deregulates proper development of the growth plate in embryo. We hypothesize that TG2 is a key regulator of cartilage formation. The objective of this proposal is to investigate the mechanism by which TG2 regulates chondrogenesis in vitro. We will test our hypothesis by pursuing three Specific Aims. (1) We will identify which stage of chondrogenic differentiation is affected by TG2 in vitro. For this we will analyze expression of the stage- specific markers of chondrocyte differentiation. (2) We will define the signaling pathway(s) which mediate regulation of chondrogenesis by TG2. Here, we will test the hypothesis that 2-catenin signaling plays the key role in the TG2-dependent regulation of chondrogenic differentiation of mesenchymal cells. These studies will be performed using biochemical assays and pharmacological inhibitors of 2- catenin. (3) We propose to analyze the requirement for trans-amidating activity of TG2 in regulation of chondrogenesis, using pharmacological inhibitors of TG2 and the already existing viral constructs for overexpression of both the wild-type and catalytically inactive forms of TG2. The long-term goal of our research is to characterize the molecular mechanisms that govern cartilage formation both in vivo and in vitro in order to direct and maintain differentiated chondrocyte phenotype and to provide approaches for treating arthritis and other skeletal diseases. PUBLIC HEALTH RELEVANCE: Deterioration of cartilage due to trauma or disease, most notably arthritis, affects over 20% of adults in United States, and the frequency of this pathology is projected to further increase with the aging of population. Healing of damaged cartilage is extremely inefficient, therefore creating cartilage implants in vitro has recently been put forward as a promising therapeutic approach. The goal of this study is to characterize the molecular mechanisms that govern cartilage formation both in vivo and in vitro, and thus to provide molecular tools for bioengineering of robust and stable cartilage implants.